tv Bloomberg Markets Bloomberg August 9, 2016 10:00am-11:01am EDT
♪ vonnie: we will take you from washington to london and cover stories in germany and brazil in the next hour. investors,prised naming the latest financial forecast and planning to sell about $8 billion worth of assets. is the second half of the year a little too ambitious? >> when the time comes to negotiate britain's future relationship with the european block, the uk prime ministeradd-on to every of demands from european union nations. where the red line could be drawn. for in and what to watch disney's third-quarter results. the latest on the theme parks, ruby studios and tv networks. a few let earnings and an interview with bob iger.
we are about 30 minutes into the trading day. let's head to the market desk, where julie hyman is watching the first half hour of trading. julie: a little bit of gains, enough for the s&p 500 to be the record on the closing basis. but the nasdaq to be the same, although it is 5231 that the index would have to exceed to beat an intraday high, so all three moving up at the moment. let's take deeply into the nasdaq, some of the out performers there include charter communications. that company out with earnings this morning that beat estimates. also, up sales coming up by 6%, , as well asmates video subscribers and internet subscribers rising. fororks solutions being out performance, saying they will take new shares of the apple
iphone seven and microchip technology also rising on earnings. analysts saying the acquisition of another company is yielding results more quickly than anticipated. operating margin reading estimates there. on the flipside, declines to mention that are holding back the gains in the overall averages. retail with another terrible session. last week, they were a couple of days and retail got clobbered. research cutting their estimates for earnings per share and comparable sales for the second quarter, saying that sales in july have been softening and gap coming out with another disappointing comparable sales news. sales are down 4%, down a at banana republic, specifically. the widening out look at some other retail stocks. coach coming out and forecasting earnings and sales roughly in line with analyst estimates for this year, somewhat reassuring with shares up about .75 of 1%.
furnitureline retailer, way fair, coming in worse than estimated and customer growth perhaps a little lackluster, which is what analyst anticipated. about 90 minutes away from the european equity market close and volatility is down and .5 of up, stoxx 600 up 1%. if you look at gr on bloomberg, you can see it is green pretty much across the board. carmakers leading the gains and the only industry group up one -- more than 1%. a couple of bloggers, commodities and these carmakers are nearly green and they had in fact entered bull market territory. we talked about this yesterday and they had the highest close yesterday and it is now up more than 20% from a february low. this is the dax index your today
.50 six on germany's benchmark index. the other big story has been what is happening to bond yields and spain's 10 year yield fell below 1% of the first time ever and still holding below that, but i wanted to show you the spread between two and 30 year government bond yield because this is that the narrowest since april 2015. this yield curve flattening, showing that the ecb bond buying program is boosting that for the longer dated debt. finally, in terms of where we see losses, it will be externally, down for five days in a row, the longest losing streak since may. let's check on the bloomberg first word news. alicea has more. >> hillary clinton as agreed to take part in all three presidential debates. there wasn't much question that
clinton would show up. it came in response are complaints from donald trump. he said that the dates are unsuitable. two of the debates were scheduled on football nice, to reduceresist -- viewership. small business and manufacturer groups praising donald trump's tax proposal. the presidential candidate called for the u.s. to take the federal opera tax rates in the highest to lowest among developed nations. 35% to 15%. they called trump's proposal to home run. turkey's president met with vladimir putin today in st. petersburg. the russian president told that turkey president that he hopes they will restore constitutional order in the wake of the failed coup attempt. twoook nine months after and post sanctions. -- after putin imposed sanctions. china is hanging on the fate of
the nuclear power points. they have minority stake in the $24 billion project. in today's financial times, china's ambassador in london says cancellation of the par plan could affect trade with written's second-largest trading partner outside europe. the british government will decide next month whether to build the plant. migration to europe has dropped sharply this year according to the international organization for migration. 262,000 refugees across the mediterranean to the consonant and there were more deaths in route this year. almost 3200 so far. thanl news powered by more 2600 journalists and analysts and in hundreds of countries. vonnie: thanks. 'now to valeants surprised -- not to valeant's surprise. shares are climbing as the company holds firm on their for
your guidance. the ceo gizmo clarity on a new strategic direction. i am looking forward to spending more time talking about a our products, improving patients lives, and less about her bank debt. vonnie: bloomberg reporter listens into valeant's call and it was papa's second earnings call. did he do better? restored a lot to confidence in the approach and tone he took today. there is a lot going on. we are processing it all as it comes. one of the most interesting things is they will renegotiate with an lenders to get more comfortable with their debt. i think the market reacts sensibly to the fact that. rated earnings guidance and that was the expectation, that they might not be able to make it. if they could not make their earnings guidance, does that mean they will run into trouble with their debt? they preempt that with making changes to their debt and that will start the process today.
vonnie: sticking to modified covenant with lenders, the headline, what does that mean and by how much will they want to reduce? what will lenders get? cynthia: for valeant right now, what they need to do is create a scenario where everything does not have to be pitch perfect for them. they have to have wiggle room because the guidance they offer requires a big pickup in the business in the second half of the year. all they may be able to do that, that is a high hurdle for them to meet. it is basically a back half weighted guidance for turning things around in the next five months to six months. what they would davis basically ask lenders for little more room. that will come down to the help of the debt markets and what debtholders really want. they have been pretty supportive of dalliance. in has not sold off to pass an extreme amount as you would expect. there are a lot of things valeant can sell in order to pay
this back if that's what they need. little bit more about where we are with those asset sales. cynthia: right now, a couple in the quarter, but small stuff. they brought in something like what hundred 80 million dollars in upfront payments and more coming down the line, but this is nothing meaningful. they said that could be as much as a billion dollars and stuff they may look at the cell, but it is not clear. they talked about how they are entertaining offers coming in the door, so basically it seems like it is pretty early still, but something that will get worked out over the next year because they're coming into more debt maturity that are due in 2018, so they will have to have more activity. maintaining that forecast, that was unexpected. power analysts reacting? are they skeptical? cynthia: there were a lot of
details on how they will make the second half better, and that comes down to how they will turn things around with this walgreens distribution agreement aat they're using to replace pharmacy they sever ties with. they talked about progress with, but the talked about the things they have achieved in the past week or so, so i think it will take a while before we see this in the numbers. the critical quarter will be next quarter, when we know whether or not they are turning things around with that walgreens program and if they make money on the prescriptions they are selling. vonnie: jim atoll jeep sales down 55% and that is all part of that same -- dermatology sales down 55% and that is all ported that problem. cynthia: things are getting worse in the second quarter, but to be fair to papa, that is or he started and he is turning things around. vonnie: does he have the backing of the board? cynthia: we do not have reason to believe otherwise at this point. vonnie: good for now.
biggest stories in the news right now. private equity firm eqt is buying into the $22 million transaction. the offer is 62% higher than the intial price of $25 a share may. the company helps had care providers survey patients. targeted theaker takeover bid. 888 holdings in the rank group made an offer, according to "the financial times." saw benefits of merging their in-store and online operations. is buyingolding monster job site worldwide. they will pay three dollars -- around three dollars in cash. monster went public in 1996, as y haveertising agenc
placed as a telephone directories. that is your bloomberg business flash. >> now to markets and morgan stanley chief scientist at the parker, who is optimistic about u.s. equities. despite the complacency around investors and relative low [indiscernible] there is a bullish look on stocks. tom keene asked parker what complacency signals to investors. i am complacent for reason, every time i worried about something, it turned out to buy an opportunity for u.s. equities. if you list all the things are worried about, all of them were by and that is why people are complacent. i know we talk about u.s. equities as general, but you want to make sure that the companies you choose first growth in sales. who are they? adam: he tried to make sure that
they are not impregnating huge bets around what focus. tom mentioned those are difficult to forecast so we will be penetrating around those key macro factors, so utilities are way cheaper than staples for the and we are -- roe always going to be kind of balance and beat the index, as opposed to making the huge bet on the factors. francine: how do you factor in currencies? strategisturrency has a strong dollar call of the time, so we try to make sure we do not have huge bets and machinery or and chemicals or select staples, select tech, where the strong dollar will hurt earnings the most and make sure they are more balanced against that. ultimately, it is hard to get away from that strong dollar call. francine: two you have a call one pounds? do you even care about what
pounds is doing? ada not that much, we have a screen ofm: hi u.k. exposure, but it is more forgetting bowties and [indiscernible] idoffright from the debiav cigar store, and you go right there down three stores and there are the bowties. i went to talk about multinationals. you have a great historical perspective. it's this nifty-50 pricing or are we not there yet? adam: i do not think we are there yet. tom: i agree. adam: i think we could get there and you talk about spanish this isnd under 1%, and where i think you get forced into u.s. equities because you have a 2% dividend yield and over 2% buy back at the call option under earnings. tom: is the 30 multiple historically doable for a portfolio? adam: i think it is possible.
tom: [laughter] crazy, but ids think in the world we are in, when you have a pile of money and you have to allocate assets, you will like you us equities a lot. hell of aas been a ride and i give you great credit for never saying, go to cash. that is a death. what a ride. market.unloved bull but do tell morgan stanley producers and clients? adam: are simple call is a bull call. you can pick up our things renew our bearish. the simple bull call is bottom-up earnings are pretty low the next couple of quarters and the u.s. looks like the best region in the world. nobody is really positioned for the big up market, no matter what you look at, teachers, options, etc. parker ons adam
more, let's go to julie hyman. isie: today, lisa abramowicz in and specializes in investment grade bonds and corporate bonds, so this must be happy news for you. i guess your sources are probably pleased about this performance. lisa: it is mixed. on one hand, it is terrific because you have seen an amazing oldestance in the ingress -- investment-grade bond, etf, and attracts more than $6 billion so far this year and return more than 9%, so that is a lot of returns and a really good performance, but you are seeing so much money flowing in from overseas and for people just looking to get something yield on their investments. people are worried that it is getting to be too much. you are seeing companies increasingly by, increasingly sell debt to purchase their own
cells -- to repurchase their own shares. the more money for them, the more you have to wonder, are there enough investments out there to buy with this money? is it worthwhile to keep investing? that is an increasing question that people have. julie: when you look at it from the etf perspective, there is lqd and agg, so talk to me about those two. are there significant differences between them and how have they done this year? lisa: agg looks at corporate and sovereign debt, and lqd focuses on a corporate great debt in the u.s. you have seen it underperformed lqd and that said, it is investing in higher rated that it invest inng sovereign securities, but it also has attracted significantly greater amount of money. it attracted more than $9 billion of debt, a greater
increase in assets than any equity etf and any other fixed income etf in the u.s. julie: kind of amazing, especially considering if you look at the u.s. stock market. at or near record highs, so interesting by comparison. why is this so attractive? is it a matter of yield? people want it however they can get it? lisa: i was another bank of america report by hans mickelson and they had a foreign tracker, or they look at how much of the overnight, when things are coming in, and they are looking at sort of trying to fromstand the money coming japan, europe, and now japanese life insurance as the greatest amount of money flowing toward foreign investments in years, so you have these investment firms that need to find something somewhere and that provides them some income. based on the currency swap and
hedging, it is getting less advantageous for them to invest in treasuries, so they are going down the risk or down the risk spectrum little bit and going into investment-grade corporate debt, which is a little bit riskier but offers more yield. that yield is coming down as they plow their money into it, may right seeing this size at some point, especially the yield on sovereign debt as it creeps upward, but for now, it seems like a never-ending flow of cash. julie: what is the risk? you talk about people getting concerned that so much money has gone in, so the reversal could be dramatic, but what would trigger that reversal? what would cause a temper tantrum kind of reversal? i am hearing from people who i talked to him what they are worried about is into months, when the bank of japan meets again and decides whether or not to add stimulus, whether
it has been working, what if they come back and hint to markets -- it is up, we have no then?mmunition, what all of a sudden, the message will be to markets around the world, central bankers are done and out of it. you will start to see that not only will japanese yields jump but other places will respond in similar fashion, and this could be very similar to the temper tantrum he saw in may and june 2013 and that is the increasing speculation. julie: thank you so much. keep an eye on those. vonnie: julie hyman, lisa abramowicz, always interesting. this is bloomberg. ♪
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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. [ hip♪ olympics 2016, let ] me get you on my level. ♪ ♪ so you never miss a moment, ♪ ♪ miss a minute, miss a medal. ♪ why settle when you can have it all? ♪ ♪ soccer to wrestling. track and field to basketball. ♪ ♪ fencing to cycling. diving to balance beam. ♪ ♪ all you have to say is, ♪ "show me," and boom it's on the screen. ♪ ♪ from the bottom of the mat, ♪ ♪ to the couch where you at? ♪ ♪ "show me the latest medal count?" ♪ ♪ xfinity's where it's at. ♪ welcome to it all. comcast nbcuniversal is proud to bring you coverage of the rio olympic games. vonnie: look at that, session high today with the nasdaq hitting 5231, up more than .3 of 1% and again obama's almost 19
points and other indices up about .25 of 1% apiece. let's check in with the first word news at our new york newsroom desk. lisa: delta airlines is struggling to come back from a computer failure. they are reducing the morning schedule so they can reset. that means about 250 flights are being canceled after 1000 were canceled yesterday. the airline's waving change fee's and fair differentials for passengers whose flights were delayed or canceled. new satellite photos are casting doubt on china's promise not to military rise -- militarize the chain of disputed islands. reinforced aircraft tankers are being built on the islands in the south china sea. the center for strategic and international studies save the hangers have room for any fighter jet in the chinese air force. brazil, the senate begins voting tonight on whether to put onpended president rousseff
trial. she's accused of breaking the budget law and expected to lose simple vote, requires a majority. opponents would need a two thirds majority to keep her from assuming office. singapore has put up a decision to buy as many as one dozen at 35 fighter jets, according to the pentagon. singapore is not sane when it will revive efforts to buy the jets. the f 35 is the most expensive weapons i system ever. global news 20 four hours a day, powered by more than 2600 journalists in more than 120 countries. i am lisa parenti. thank you. disney reports earnings after the u.s. closing bell today. three things to focus on, pimm fox, movie studios and tv networks, especially espn. -- theme parks, movie studios
and tv networks, especially espn. shanghai disney was opened in june, adding to the company's impressive arsenal. disney attracted just under 140 million visitors last year. shanghai they attract 3.5 million or the end of this year. shanghai park is critical to disney in helping boost its international business. disney reported a profit on the international market investments since it began breaking out the business in 2004. as for the movie business, disney could see record box office this year. you were looking at a fixed income which jumped 27% last quarter thanks to "star wars" and the boost. this reporting season, "finding book" could all help with the boost. "captain america" is the national movie -- is the top of the internationally and there is for thisovie scheduled
year. a big profit driver for disney is 45% from the revenue last quarter. this quarter, results may be a mixed bag. it is expected to rise as losses .t espn way on used in has lost almost 2.4 million subscribers since the start of 2016. that translates into nearly 10 million fewer customers then back in 2013. because of the high demand for sports programming, espn charges height affiliate fee. the problem is, disney is affordable to people and bundling their cable packages and/or cutting the cord. we have been looking for numbers and disney results will come after the u.s. closing bell. nejra: let's continue the anused on disney with analyst or fdr capital markets, where he covers the company. he has a price target of $108 a
share, with the market perform rating, which is a recent downgrade. barton joins us from arlington, virginia. give us the rationale behind this downgrade and tell us what you are expecting from them today. >> i have been recommending disney for four years, and for most of the four years, it has been a tremendous opportunity, as the company has resized the studio business with success is star wars, frozen and they had very good momentum in the theme durable, they are very overall. i think the story with disney from here is one of difficulty topping this tremendous performance they have put up in the studio. i think this year, they have 22% share of profits to mystically and i think your be hard for them to go from there, but they
will hang around this level and continue to perform at a great pace. i think the thing part business has been to benefit a lot from the shanghai at launch, but i think there is worry and concern domestically with latin american attendance. i think the orlando market is perhaps softening and i think that the tv networks, espn had a the nbaarter, thanks to finals and they booked the ad revenues, but going forward, there will be a new nba contact, so i just do not see disney growing a whole lot next year, and that makes it difficult for me to recommend the stock, even though i think it is a great source of assets, but i do not know that it outperforms over this you would the pressures. nejra: you have nicely summed up your view on the different areas, but is there one in particular or a couple that you will be focusing on when the earnings come out that might
perhaps change of view in anyway? >> i think where i am interested in is what is happening with the theme parks. i think the shanghai launch, i think that will be terrific. i think it will be the most profitable park when all is said and done. in time, it will be the most profitable disney park will believe. it will have the pricing structure and cost structure and i think it is a great set up. domestically in orlando, i am wondering what they are seeing. the first quarter of the year, we saw that downgrade and what is happening there now with the weakenings, and macro situation with sun america which is an important part of the market. i am interested in their abilities to tell us what is happening. nejra: we were just reporting that espn is 45% of the revenue there for quarter. how much goes to this line are
conditioning help and not decline? iston: i think disney growing low digits, which is the core driver of their cable network segment. i think the abdomen or will be tremendous on the sport cycle. i think that the pace of people canceling subscriptions is not changing much and what we have seen in recent quarters with industry is down a couple percent year over year. disney has seen that and i think some of the numbers are not capturing accurately what disney season relationship with cable companies. i do not think there is a dramatic change in projector he, just a study line -- projector eight, just a steady line. they do not have a lot of affiliates but they do have extra cost pressure, so it will be important to see what the market is for them next year. i think you feel hopeful in this microenvironment, but the secular concerns are kind of
going to be something that weighs on the stock earnings and all the concerns will come up front. nejra: what is your question going to be on the conference call? if we are able to get in there and people jockey for position, i am seeing what they orlando, to say about latin america, the news flow, and to people still want to go to theme parks like they used to? nejra: our thanks to barton for joining us today. later today, bloomberg's david westin will be talking with 6:15 p.m. bob iger at eastern time. do not miss it. hill, a news on william leading company in the u.k., saying they rejected a proposal and aaa -- from 888-rank they rejected the share offer from rank-888.
company's dealings with merchants in japan. what officials might be looking for. today's quick take, thailand's democracy is in turmoil as military rollers did again. will the army live up to promises to hold new elections? ,ejra: we begin in britain where more data suggest the british economy was losing momentum before the brexit vote. it barely grew in june, up .1 of 1%. nine of 13 sectors declined, with transport the biggest loser. nejra: the country's factory gate deflation in china in the seventh straight month, signaling improving conditions for manufacturers. the price index dropped 1.7% in july from one year earlier, the smallest decline in two years. pointer prices jumped one 8%, matching estimates. how lynch how is chief greater
economist at bank of america merrill lynch and believes china's central bank will be encouraged by what it sees. at the moment, they look at the data set up as we do, and it looks reasonably ok, and as economic and mental look rather firm, they probably will not be in a hurry to introduce much more easing when they are concerned with overall leverage ratios. nejra: the fair trade commission in japan searched offices, according to a person familiar with the matter, and the proquest to do with merchants to sell goods on amazon's website. they're looking into whether amazon tried to make deals like it more favorable conditions e-commerce companies. amazon is not commenting. the company has been trying to revive the brand by introducing new items and designs. coach is also spending money on marketing and remodeling stores.
time for our bloomberg quick take, or we look at background on issues of interest. thailand has [indiscernible] banks, pushing tourism and a growing middle class. it is also experiencing dozens the last decades. with this intervention of military and polarized population, what are thailand's odds for true democracy? endorsed areferendum new constitution that will strengthen the army's influence over future elected governments. critics of the new charter's many voters may have voted toply to hasten return democracy. thailand's army seized power in may 2014 and a military coup after months of street to magicians against the elected governments. they peacefully pushed back the timetable for new elections, now calling for polls in late 2017.
here's the background -- thailand has had one doesn't coups since the seventh century role of kings -- one dozen coups since it the seventh century role of kings that ended in a bloody push that turned into a constitutional monarchy. the economy got a jolt from u.s. economic aid that rewarded thailand's campaign against communism. the country has proved resilient, bouncing back from the crisis and more crises the past two decades. the worst outcome could be a breakup of the country or civil war. the middle class and royalist elites have resisted seen in control. they reject the idea that they are forwarding democracy, saying the political system needs to be swept clean up the former prime minister's influence. the goal, critics say of political unity is unrealistic and what is needed is a robust ethical framework that allows politicians to fight and out without the risk of military meddling. you can read more about
thailand's quick takes at ni quick on bloomberg. turning to u.k. politics and a bloomberg exclusive. when prime minister theresa may . she willks with e.u be hit with [indiscernible] their consents cover everything from free movement and security to fishing rights, to stopping the spread of other separatist movements. we are joined from berlin with more. tell us what did we learn. collaborative fair were we to run bloomberg reporters across europe and all of the 27 governments. what came across very clearly was the disparate, sometimes competing demands that these
governments will bring to the table. governmentresa may's is starting to formulate the position, sore the other 27. these concerns -- so are the other 27. these are concerns from the baltic states, right across britain's nearest neighbors. but came across is overwhelmingly the disparate demands. there was a huge array of concerns that these countries will bring good, and that the u.k. government will have to address in some form or another. nejra: what does this mean for theresa may's government? will it be the pure challenge of trying to sort of it in with all of these the men's or are there certain things -- all of these demands, or are there certain things, for example, what they think of the free movement of people that will have the biggest impact? : what is starting to come
through is that there are some obvious claims of the u.k., such as ireland, which it tends to be the most affected economically, so it is determined to make --aks it out -- brxit as brexit as soft as possible because ireland seems to lose. equally, greece and cyprus, they are also determined to avoid any further impacts because that in turn affects british tourists and their willingness to come to greece and cyprus on holiday. yes, there are potential big hurdles ahead, and it countries such as germany, but also italy and france, so the big three countries, they are determined, at least in the public positions, to hold the u.k. to the rules on freedom of
movement. there were only three countries that mentioned immigration as priorities. it seems like it is more urgent percent countries than others. thinking of scotland, ireland and nearer countries. what happens there? had they appointed people to already deal with this or are some putting it on the long fingers? alan: we did not go into that as we arel, as far aware. and some capitals, the bigger capitals, they have been appointed people. in the smaller capitals, frankly, one of the interesting things was in croatia, they have yet to express major concerns around the issue. , there is countries more at stake and they are taking this seriously. vonnie: all right, alan, fantastic story. brexit red lines drawn as the
four years, enthusiasts and collectors relied on robert grading 100 point system when buying wine. a former investment bank has created her own 1000 rating system called winelister.com. it is the first databased wine rating system and she joins us now. career in from a banking to founding the company. what made you start the company? ella: moving into line journalism from investment banking made it immediately
clear that the worlds were different. i thought that fine line deserve -- fine wine the same kind of analyst bigger and it seems that they felt the same and it resonated with them, so i thought i would see what i could do about this. nejra: you talk about going from 100 points to 1000. what is different what is on the scale? ella: good question. 100 points may have been an update were really -- been enough if it weren't 100, but there are only 20 points to play with and there are about a dozen different criteria, so we needed that extra scale. what other things do you allow people to choose from? can you look at geographies? ella: absolutely. when you are searching on wine-lister, you can search parameter.
our users seem to really like the vintage comparison tool, for example, then you have wine-list investment say folds, and these are useful for identifying particular characteristics in the wind, so for example, you might have a really important dinner with the clients and you want to make an impression, so you choose one or it is wednesday anyone to discover something that home, say go with a hidden gem. nejra: how did you start this? were you looking for private backings or raised money yourself? ella: we raised money from private investors to make it happen. lovers,r average wine smalltime investors. nejra: give us some of the details on how much it costs, where is it available and how can people use it? ella: it is available at wine-lister.com and the
prescription cost 90 pounds for a year or 10 pounds per month and there is a free trial for 14 days available. nejra: who can use the site? anybody or collectors? ella: it is fair to say the majority of users are collectors . you probably do need to have a higher than average interest in wine, but there is something on the for everyone. it is just depends on how deep you want to get. nejra: thank you so much from wine-lsitister.com. you can read more on nipurs uitgo on the bloomberg. coming up, a closer look at the european bonds. let's take a look at the markets now because we have seen yields in the u.k. dropped a fresh record lows looking at the 10 year, but given that we are 35 minutes from the european equity
market close, stoxx 600 up .8 of 1% and the dax up 1.9% in bear territory. let's look at bond and currencies. you can see the year there, the 10 year down five basis points, fresh record low. same 10 year yield below 1% and sterling down for a good day. longest losing streak since may. vonnie: we are now at a record a 1%. in today, point to nasdaq is2185, 41% -- up 21 84, .4 of 1%. this is bloomberg. ♪
trading day in europe and you are watching the european close on the bloomberg market. >> from washington to london, we cover stories in brazil and italy. bondack of england's new buying program already showing signs -- signs of distortion. at the same time, spain's 10 year bond deal declined to a record low. >> the day after his speech in detroit, bloomberg takes a look at how donald trump's vision stacks up. plus, how the strategy compared to hillary clinton's.